FOMC Meeting: Will Jerome Powell & The FED Cut Interest Rates On May 7th?
Highlights
- FedWatch data shows that there is a 91% chance that the Fed will keep rates steady at the next FOMC meeting in May.
- Polymarket traders are also betting against the Fed cutting interest rates at the May meeting.
- US President Donald Trump urged Fed Chair Jerome Powell to cut interest rates severally.
The crypto community has its eyes on the next FOMC meeting holding in May, with discussions on whether Jerome Powell and the Fed will cut interest rates. However, traders are betting against this happening and instead, expect the US Central Bank to hold rates steady despite calls from US President Donald Trump.
Will The Fed Cut Rates Following The May FOMC Meeting?
CME FedWatch data shows there is only a 9% probability of the Fed cutting interest rates to between 400 and 425 basis points (bps) following the FOMC meeting, which will take place between May 6 and 7. Meanwhile, there is a 91% chance that the Fed will keep rates steady between 425 and 450 bps.
Polymarket traders are also betting on the Fed keeping interest rates steady. Data from the prediction platform shows that there is a 90% chance that the interest rates will remain unchanged following the May meeting. There is a 9% and 1.2% chance that the FOMC will cut rates by 25 basis points and 50 basis points, respectively.
It is worth mentioning that Bank of America earlier this month predicted that there would be four Fed rate cuts this year. They expect the first rate cut to come in May, with the others coming in July, September, and December.
However, it is understandable why traders are betting against a rate cut happening at the next FOMC meeting. In a recent speech, Fed Chair Jerome Powell suggested that they have no intention to cut rates until they determine the extent to which Trump’s tariffs could impact the economy.
In his speech, Powell also suggested that the tariffs will likely lead to higher inflation, which is why they are cautious about rushing to ease monetary policy.
Meanwhile, US President Donald Trump has insisted that this is the right time for Powell and the Fed to cut interest rates. Trump warned of a slowdown in the US economy if Powell and his committee refuse to cut rates.
Why The Fed Is Unlikely To Cut Rates
In an X post, market expert Kevin Green stated that prices are up, new orders are down, and general activity is cratering, which is why the Fed is unlikely to cut interest rates at the May FOMC meeting.
He remarked that the US Central Bank isn’t cutting rates without a significant crack in the labor market. The expert also suggested that the Fed is unlikely to cut rates at the June FOMC meeting, stating that time is running out for the datapoint to justify a June cut.
Market participants will have their eyes on the US GDP and PCE inflation reports, which will be released on April 30. These data could impact the odds of the Fed’s decision at the May meeting.
While a rate cut looks unlikely at the moment, a potential cut would undoubtedly be bullish for the Bitcoin price and the broader crypto market. The easing of monetary policy leads to more injection of capital into these risk assets.
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